Alexandra would like to retire in 25 years. She is going to invest $200 (before tax) each month in an RRSP account or in alternative stocks. The RRSP will earn 6 percent interest, compounded monthly and the alternative investments will earn 8 percent, compounded monthly. She likes the flexibility and potentially higher return that the alternative investments provide. Alexandra is in the 30 percent marginal tax bracket.

1. If Alexandra puts all of her money into an RRSP and then withdraws it all when she retires, what will her after tax income be? (getting to the final answer will require 3 calculations).

2. If Alexandra invests all of her money in alternative stocks, what will be the total value of her savings at retirement ? (remember that this income will be taxed prior to being invested, therefore you must first calculate the amount that she will actually be investing after tax is paid)

3. What is the final value of all of these investments if she cashes them out when she retires (this has to do with capital gains!)